Financial discipline
With a growing economic potential and improved investment margins, the curse of Sub-Saharan Africa’s macro-economic development has been financial indiscipline.
From a weak culture of savings and investments from a growing middle class to high debt profiles and government spending, Africa’s macro-economic outlook still looks somewhat challenged. This trend has been a source of worry for major financial regulators such as the International Monetary Fund (IMF).
In an interview with Bloomberg, Managing Director of IMF, Kristalina Georgieva, warned that high debt levels are inimical to general growth especially when borrowed funds are not invested in the right places.
“Debt on its own is not bad, it is bad when it goes for the wrong things, and when it goes with a speed that the economy cannot handle,” Georgieva said. As it stands now, the debt to GDP ratio of major African economies like South Africa is expected to hit 81 per cent by 2028. Ghana will hit 62 per cent to GDP by the end of 2019 with only Nigeria hitting below the average of 16 per cent to close the year 2019.
